Union Budget 2026: How Will the Move to Increase STT Affect the Market?

Delhi, February 2, 2026: In his interaction with ET Now Swadesh, Dhiraj Relli, MD & CEO of HDFC Securities, said the government’s recent measures to curb excessive speculative trading could weigh on market sentiment in the near term, but are aimed at creating a more stable and investment-friendly market over time. 

Relli’s comments come in the backdrop of changes announced in the Union Budget, which proposed an increase in Securities Transaction Tax (STT) across derivatives. The STT on futures has been raised to 0.05 percent from the current 0.02 percent, while STT on options premium and exercise of options is proposed to be increased to 0.15 percent from 0.1 percent and 0.125 percent, respectively. 

He said the steps appear to have been taken after careful assessment of recent market behaviour. While the immediate reaction may be negative, he believes the intent is to improve market quality by discouraging excessive short-term speculation. 

Long-Term Focus on Investment Discipline 

“The immediate impact of the announcement is likely to be negative for the market,” Relli said, adding that limited participation could still be seen if transaction costs such as STT rise only marginally. 

He noted that although the measures may not be sufficient to significantly revive short-term investor interest, they could gradually shift market participation towards medium- and long-term wealth creation. According to Relli, speculative activity is unlikely to disappear altogether and may re-emerge in a more balanced and disciplined manner over time. 

Relli further said that maintaining the right balance between curbing speculation and preserving market depth is critical. He added that the Ministry of Finance appears to be moving in the right direction, with recent steps signalling an intent to bring greater stability and seriousness to capital markets. 

Disclaimer: Dhiraj Relli is Managing Director and CEO at HDFC Securities. Views expressed are personal.